Duluth's Prosperity Agenda

By Drew Digby
February 2010

In Duluth workforce issues have often divided anti-poverty advocates from economic developers. These two groups have had difficulty agreeing on the most effective strategies to pursue. When Mayor Don Ness took office in 2008 he decided to take advantage of a special training opportunity from the National League of Cities. Mayor Ness and 10 community leaders attended a retreat in Savannah, Ga., to plan ways to work together.

Ness said that bringing the two groups together to work on five key areas — housing, poverty, quality jobs, education, and business climate — would reinforce each other by aligning resources. Criticism of some efforts — that some economic development plans only brought in low-wage jobs while others focused on high-end professional jobs, leaving poor residents out in the cold — could be limited by finding ways to work together better.

A key outcome of the Prosperity Agenda effort is the “Prosperity Index” used to measure Duluth’s progress in creating and sustaining prosperity. The Index, created in partnership with the Minnesota Department of Employment and Economic Development (DEED), will track progress in the five key areas. The Index’s base year is 2009, and progress will be measured from that point forward. The Prosperity Index is designed to measure not just the number of jobs created but how the broad population is doing in several categories.

The following explains the five key elements of the Index:

• Housing. 20 points. Tracks the percentage of the population considered “cost-burdened” by spending more than 30 percent of their household income on housing. Tracks the percentage of owner-occupied single-family homes.
• Income and Poverty. 30 points. Tracks the percentage of the population with an income less than 200 percent of the federal poverty standard. Tracks the difference between Duluth’s median household income and the state’s median household income.
• Workforce/Quality Jobs. 20 points. Tracks the comparison of the average weekly wage of workers in Duluth to the state’s average weekly wage. Tracks the percentage of adults in Duluth that are in the workforce.
• Education. 10 points. Tracks the total education level of Duluth residents over age 25.
• Business Climate. 20 points. Tracks the number of jobs in Duluth.

These elements were chosen because they represent data that have an impact on the overall prosperity of residents of Duluth. The index is designed to show progress — or challenges — by using scales that show changes in the city’s underlying economy. There are many more measures of how a community is doing, but these were chosen because data are already collected annually for these elements, and they serve as jumping-off points to further analysis.

Another feature of the Index is an understanding of current budget constraints. Mayor Ness wanted to make sure the data were already collected by the city or other agencies so that the measurement did not require collecting new data. As a result the Index is a combination of city housing data, workforce data from DEED and data from the U.S. Census American Community Survey.

The Index is set at 100 for both Duluth and Minnesota so that trends can be seen over time. Each element will move slightly each year. Some of the measures — a measure of median income and another of the average weekly wage — are designed to measure the difference between the Minnesota number and the Duluth number.

The index features were chosen primarily because they are accepted measures of economic health of a community. They were also chosen because they are from reputable data sources, are already collected by government agencies, and fairly represent aspects of the economy in Duluth. The Prosperity Agenda team reviewed selections and made recommendations about the Index elements and how the elements’ movement should be based and evaluated.

With the announcement in January 2010, the mayor convened teams of government, nonprofit, and business groups to address each issue, with the goal of not necessarily creating new initiatives but rather bringing existing efforts into alignment and deciding which efforts have the most impact. Each group will engage community members and develop objectives and strategies to increase economic growth and widely shared prosperity.

“Patience and long-term investments are needed to build sustainable prosperity now and into the future,” Mayor Ness said at the announcement. “With coordinated community investments, we will see positive outcomes in the creation of jobs, increased wages, a more productive workforce, and healthy and viable neighborhoods.”

The development of the Prosperity Index was also an effort to give civic leaders a better picture of the strengths and challenges of the local economy. One thing that has been clear to city leaders is that the city is no longer as dependent on the traditional industries of northeast Minnesota like forestry, mining, and manufacturing. While tourism is one of the important industries, the growth of architecture, engineering, and computer system design firms has raised the annual payroll for professional and business services to more than double that for leisure and hospitality. In addition, the continuing growth of health care has meant that many of the traditional economic equations have changed. In 2008 health care and social assistance jobs were more than 27.9 percent of the total of all jobs in Duluth.

That diversification has also been crucial to Duluth’s relatively mild current recession. In 2009 the rest of northeast Minnesota had an average unemployment rate of 10.2 percent while Duluth’s was just 7.7 percent, slightly under the state average of 7.9 percent.

Duluth’s median income and the average weekly wage still lag the state averages by substantial margins. For example, currently the average job in Duluth pays $757 a week compared with the state average of $881 (see Figure 1). The Prosperity Index will go up if that gap can be decreased.

Other measures are focused solely on local data. For example, one of the positive changes in Duluth is the increase in the number of residents with a college education. A study of 2005 data by the Census Bureau showed that those without a high school degree earned an average of less than $20,000 a year compared with $37,990 per year for an associate degree and $54,689 for a bachelor’s degree. The numbers are even more dramatic for advanced degrees — those with a doctoral degree earning a median around $80,000 a year and those with a professional degree about $100,000.

The number of people in Duluth with a bachelor’s degree increased from 22.5 percent in 1990 to 32.8 percent in 2008, with the increase in Duluth moderately outpacing the numbers for the rest of the state. Even in recent years the number of Duluth residents with at least some college has continued to rise (see Figure 2).

Using DEED’s Quarterly Census of Employment and Wages, the Index also tracks traditional economic indexes such as the total number of workers in the city.

The data sources aren’t perfect. The American Community Survey has had a fair amount of year-to-year variability from the small sample size within Duluth. For example, the percentage of residents living at or below 200 percent of the federal poverty level has bounced from 40 percent to 34 percent and back to slightly over 40 percent between 2006 and 2008 (see Figure 3). But the belief is that individual data variability evens itself out over time and that the combination of measures will let the city see how it’s doing.

Additional details are available on the city’s Web page: 
www.duluthmn.gov